Return Rate

Customers have different reasons for returning products, such as receiving a damaged item, not liking the product, or finding that it doesn’t fit or meet their expectations.

Understanding the product return rate, calculating it accurately, and implementing strategies to reduce it can help online stores improve customer satisfaction, increase profits, and build a loyal customer base.

What is Return Rate?

The return rate is the percentage of products returned out of the total number sold.

Return rate is an essential metric for online stores as it helps them understand the percentage of products that are not meeting customer expectations. By tracking the return rate, online stores can identify the products that are most commonly returned and take action to improve their quality, descriptions, or images.

How to Calculate Return Rate?

To calculate the return rate, divide the number of returned products by the total number of products sold, and multiply it by 100 to get the percentage.

Return Rate = (Number of Returned Products / Total Number of Products Sold) * 100

For example, if an online store sold 1,000 products in a month and received 100 returns, the return rate would be:

Return Rate = (100 / 1,000) * 100 = 10%

Impact of a High Return Rate

Product return rates can have a significant impact on online stores, both financially and operationally. Here are some ways that high return rates can impact online stores:

Financial Impact

High return rates can have a direct financial impact on online stores. When customers return products, the store must refund the customer’s money, which can reduce revenue and profit margins. Additionally, the cost of shipping and restocking returned products also add up and impact the store’s bottom line.

Operational Impact

Processing returns and managing inventory can be time-consuming and can divert resources from other critical business operations.

Additionally, managing returns can also impact customer satisfaction, which can harm the store’s reputation and make it harder to attract and retain customers.

Customer Impact

High return rates can also impact customer satisfaction. If customers have a negative experience with returning products, they may be less likely to shop at the store in the future.

High return rates can also indicate that there may be issues with product quality or customer service, which can further reduce customer satisfaction and loyalty.

How to Reduce Return Rates

Here are some strategies that can help reduce product return rates:

Detailed Product Descriptions

When shopping online it is important to give the customers an accurate description of the product to set expectations and avoid misunderstandings.

Include accurate sizes, materials, and other information a customer would want to know. This will help them know what they are purchasing and what to expect, and reduce the chances of them returning it.

Clear Return Policy

A clear return policy can help customers feel more confident in their purchase, knowing that they have the option to return the product if they are not satisfied.

For example, instead of having a 30-day return policy, you can extend this to 60 days. Customers will have additional time to try out the product. Having more time will allow them to take their time and see if they like it.

High-Quality Packaging

Proper packaging can help prevent damage to the product during transit, reducing the likelihood of returns due to damaged goods.

Excellent Customer Service

Promptly addressing customer concerns or issues can increase customer satisfaction, which can reduce the chances of returns.

What is the Average Return Rate for Online Retailers?

The average return rate for online retailers can vary depending on the industry and specific retail business. However, in general, the average return rate for online retailers is around 30%. According to the National Retail Federation, online retailers generally have a higher return rate than brick-and-mortar retailers, due to the ease and convenience of returning items via the web.

Some industries, such as fashion and apparel, typically have higher return rates because customers may order multiple sizes or styles to try on before making a final purchase decision. Other industries, such as electronics or home goods, may have lower return rates because customers tend to research products more thoroughly before making a purchase.

Furthermore, return rates might vary seasonally. During peak seasons, like Christmas, Black Friday, and Cyber Monday, return rates can be higher.

While a high return rate may seem like a negative, it can also be an opportunity to improve the customer experience, gather valuable data, and increase customer loyalty.

By implementing an efficient and customer-friendly returns process, you can turn returns into an opportunity for repeat business and positive customer interactions.


What is considered a return?

Shopify Returns

Returns vs. exchange

Product Returns Factors

Returns Best Practices

Returns Metrics